MTN Uganda has reported higher earnings at the halfway stage of the financial year despite a challenging operating context characterised by changes in mobile termination rate (MTR) regulations, which affected voice revenue.
However, it also settled a tax liability, which had an adverse effect on its bottom line.
Uganda is the third of MTN Group’s companies to report after Nigeria and Ghana released strong earnings last week.
Earnings before interest, tax, depreciation and amortisation (ebitda) increased by 17.8% to Ush 924.2bn reflecting progress in the implemention of company’s operational efficiency initiatives. This was helped by currency and inflation stability, which enabled it to better contain operating cost growth.
Profit before tax increased 28.1% on account of contained cost growth and improved operating profit. However, taxes paid were 115% higher due to a one-off settlement following an assessment by the Uganda Revenue Authority. This resulted in a 9.7% reduction in profit after tax to Ush 267bn.
Total subscribers grew 10.2% to 22.8-million, while active data subscribers increased 23.4% to 10.8-million and fintech subscribers by 6.0% to 13.3-million.
Service revenue increased by 13.3% to Ush 1.7-trillion and data revenue grew 31.3% to Ush 490.2bn. Voice revenue increased by 0.4% and fintech revenue increased by 18.6%.
The volume of MoMo transactions was up by 20.3% to 2.4-billion, while the value of MoMo transactions increased 28.7% to Ush 89.3-trillion.
CEO Sylvia Mulinge said the group was confident that it was well positioned to deliver on its growth ambitions in both the connectivity and fintech businesses.
“In our connectivity business, we anticipate positive momentum in service revenue anchored by the growing demand for our data services. As we focus on the recovery of topline growth in our voice business, following the MTR changes last year, we will continue to implement our rigorous expense efficiencies to ensure operational resilience to support margin and free cash flow generation,” she said.
The company would prioritise investment in the core network focusing on quality and stability to drive both voice and data traffic.
“For the fintech business, we will continue to leverage partnerships to support advanced revenue growth. We have launched two products in partnership with Sanlam; Yinvesta, a micro investment vehicle allowing our customers to invest and earn competitive daily interest and Cover by MoMo for insurance,” Mulinge said.
“We have also revamped our MoMo App with an enhanced interface to ensure a seamless and more interactive user experience as we drive appification in our customer base. These initiatives will complement our existing portfolio to drive growth in our fintech revenues," she said.
In terms of the medium-term guidance framework, the group continues to target “upper-teens” service revenue growth with stable ebitda margins above 50% as well as “low-teens” capex (excluding leases) intensity.
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